The Dos and Don’ts to Using a Credit Card and Avoiding Debt

Back in the days when credit cards were yet to exist, people had to rely on cash to purchase goods, pay their bills, and make sure they do not acquire debts. With the introduction of credit cards, consumers’ lives were changed because of the convenience they were able to enjoy.

At present, most individuals who use credit cards would say that they do not know what they would do without it. While it does come with disadvantages—such as potentially accumulating financial debt from failure to keep up with payments and fees—it also comes with more benefits.

The advantages offered by a credit card are invaluable. However, the results of failing to control usage can be catastrophic. It is crucial to remain cautious and smart about credit card use. Here are a few valuable tips to credit card owners to help them manage debt properly:

Do Not Make Minimum Payments

Having a credit card comes with responsibilities and policies to adhere to, and everything one needs to know is written on a credit card statement. Part of that is knowing that to get out of debt, people should avoid making minimum payments each time credit is due. 

Credit card owners are not required to initiate full payments every time the credit deadline for the month arrives, but they should strive to have the capability to pay at least twice the minimum amount needed. Avoiding using the card for non-essential purposes can also prevent debt from accumulating.  

Do Have Only One Credit Card

Some people are fond of owning multiple credit cards because of the reward programs they come with and the points they can expect to gain from long-term use. However, having more credit cards means that one should be prepared to manage more credit card debt.  

If one struggles to handle debt with their current credit card, it may not be a good idea to apply for another card because it will only lead to further financial problems. The reward points for travel, shopping, or leisure are often not enough reason to hold onto more than one credit card. 

Do Not Use a Credit Card for Credit

Other than using a credit card to purchase items and acquire rewards, some people take their credit line to pay off their credit every month. Due to its lower interest rate, one might think this is an excellent idea, but it could lead to more debt.

Meanwhile, others seek a second credit card with a low promotional interest fee and perform a balance transfer to help them pay for their credit on their previous card. If one is certain about taking advantage of the balance transfer option, they should consider sticking to the first credit card and work to pay off the remaining debt before reaching the end of the promotional period. 

Do Consider the Right Reward Programs

Plenty of people get lured into applying for credit cards because of the reward programs they offer. While it can seem appealing to go on a discounted trip or to acquire a luxurious item for half its price, a purchase is still money leaving one’s pocket.

A way to take advantage of the programs without going overboard is to purchase because one wants to, not because they come with reward points. Before making a financial decision, one should remember to read through the credit card’s terms and conditions to avoid confusion.

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Conclusion

Using a credit card is an efficient way to purchase goods without dropping by the bank to make a significant withdrawal every time. However, one has to be wary about their spending habits to avoid facing more debts and money issues down the line. Remember the dos and don’ts to owning a credit card above and consider seeking a debt consultant’s help to receive expert financial advice.

DebtHelpers.ca offer professional debt help in Canada, including customized debt solutions and consulting services, to anyone aiming to live every day debt-free. Get in touch today to receive a free consultation!